Correlation Between Varta AG and Ceres Power
Can any of the company-specific risk be diversified away by investing in both Varta AG and Ceres Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Varta AG and Ceres Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and Ceres Power Holdings, you can compare the effects of market volatilities on Varta AG and Ceres Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Varta AG with a short position of Ceres Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and Ceres Power.
Diversification Opportunities for Varta AG and Ceres Power
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Varta and Ceres is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Ceres Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Power Holdings and Varta AG is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Varta AG are associated (or correlated) with Ceres Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Power Holdings has no effect on the direction of Varta AG i.e., Varta AG and Ceres Power go up and down completely randomly.
Pair Corralation between Varta AG and Ceres Power
Assuming the 90 days trading horizon Varta AG is expected to generate 2.09 times more return on investment than Ceres Power. However, Varta AG is 2.09 times more volatile than Ceres Power Holdings. It trades about 0.16 of its potential returns per unit of risk. Ceres Power Holdings is currently generating about -0.26 per unit of risk. If you would invest 91.00 in Varta AG on December 1, 2024 and sell it today you would earn a total of 47.00 from holding Varta AG or generate 51.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Varta AG vs. Ceres Power Holdings
Performance |
| Timeline |
| Varta AG |
| Ceres Power Holdings |
Varta AG and Ceres Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and Ceres Power
The main advantage of trading using opposite Varta AG and Ceres Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG position performs unexpectedly, Ceres Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ceres Power will offset losses from the drop in Ceres Power's long position.| Varta AG vs. MIRAMAR HOTEL INV | Varta AG vs. EMPEROR ENT HOTEL | Varta AG vs. PPHE HOTEL GROUP | Varta AG vs. INVITATION HOMES DL |
| Ceres Power vs. Delta Electronics Public | Ceres Power vs. YASKAWA ELEC UNSP | Ceres Power vs. Plug Power | Ceres Power vs. VERTIV HOLCL A |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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